How long before 'Cash-for-Clunkers' becomes a permanent federal entitlement?
About five seconds after I first heard about the Cash-for-Clunkers program, I wondered how long it would take before the politicians in Washington decided that if this is such a great temporary idea, how much better it will be when it becomes permanent.
Well, that hasn't happened yet, but it has been announced that the response on the part of buyers has been so over-whelming - more than $850 million of the $1 billion made available was spoken for in a mere four days! - that the program is being suspended.
Don't be surprised if Congress and President Obama use this temporary reprise and the public response to the program as the occasion to make it a permanent federal entitlement as part of government's anti-global warming effort.
Here are three reasons why you can bet this will happen:
First, anytime Congress and the White House see an opportunity to take tax dollars and give them to somebody who can vote, they will do it. In a $3.4 trillion annual federal budget, the $1 billion for Cash-for-Clunkers might seem like a drop in the bucket. The politicians have a billion reasons for why that is the wrong way to look at it.
Second, Washington cash always comes wth strings. Just look at the 15 pages of regulations telling dealers how they must dispose of the trade-ins. And don't forget NHTSA has to approve each and every deal. Right there, the government is telling the buyer and the seller what to do. That's an irresistible opportunity for the Washington politicians and bureaucrats to expand their power and perogatives over the rest of us.
Third, the timing is perfect. The economy is in a recession. The auto industry is in a depression. People are hungry for positive economic news. In just four days, Cash-for-Clunkers has given new life to the whole idea that government spending is the way to stimulate the economy. People are more receptive now than they will ever be to the idea of making a temporary measure permanent.
Fourth, Washington money is like crack cocaine. Smoke it once and odds are you are hooked. Desperate dealers are already lobbying their congressmen to keep the Cash-for-Clunkers going a little while longer. That's just putting off the inevitable agony of withdrawal. Congressman Pusherman will say, "Here, let's make you feel better for good."
Finally, the media won't tell the whole story of Cash-for-Clunkers. Reporting on it will emphasize two things - Happy dealers and buyers getting new cars and trucks, and worried dealers wondering what will happen when the program ends.
What won't be reported will be the actual cost of the program to the taxpayers, the transitory economic stimulus it provides, and how the most severe consequences will be felt among low-inomes people who must depend on used cars and trucks for their transportation.
